Monthly Archives: December 2016

Capital gains tax laws in Mexico require that tax is owed on the profit you receive when you sell your Mexican home or property. The current capital gains tax is computed two ways, and the seller gets to choose which computation to use, depending upon his circumstances:

25% tax on the gross sales amount; or

35% tax on the net profit

Let’s say you bought your house in Mexico on January 1, 2012 for US$100,000, and the exchange rate on that date was 13 pesos to the dollar. So, as far as Mexico’s tax agency is concerned, you paid 1,300,000 pesos for your house. Suppose you sold that house on December 31, 2016 for US$100,000. Obviously, there was no economic profit on your investment. Let’s say the exchange rate on the day you closed that sale was 20 pesos to the dollar. As far as Mexico is concerned, you sold that house for 2,000,000 pesos.

So how much tax do you owe Mexico on that sale? Let’s look at a simplified example:

25% of the gross sales amount. That would be 25% of 2,000,000 pesos, or a tax of 500,000 pesos, US$25,000; or

35% of your gain. Your taxable gain is the 2,000,000 peso sales price, less your 1,300,000 peso cost, times 35%. That works out to a taxable gain of 700,000 pesos, which when taxed at 35%, creates a tax bill of 245,000 pesos, or US$12,250. The notario handling your home sale will take that out of your sales proceeds and send it in. Imagine paying a US$12,250 capital gains tax on a sale where you did not make any economic profit. All this is because the peso has depreciated against the dollar while you owned your Mexican house.

If you and your home were in the United States, you would owe zero income taxes, as there was no taxable gain on the sale. In the example, you bought the home for $100,000 and sold it for $100,000.

There is also a United States federal income tax exemption on the first $250,000 of gain on the sale of a personal residence held for 5 years which was your principle residence for two of those five years; $500,000 for a married couple. Mexico has a similar rule, but which will not apply to most Americans. In Mexico, if you are a Mexican citizen, or a permanent resident, there is a tax exemption on your primary residence. In order to get this exemption, you must have used the house as your permanent residence for 3 years (5 years before 2015). The land area cannot be more than three times the building footprint, and it cannot have been used for commercial purposes, e.g. not rented out, even for a short period. Basically, you will have to sign a sworn oath under penalty of perjury that you are a resident of Mexico for tax purposes. If you have not filed any Mexican tax returns, don’t expect to qualify for this exemption. Notarios (notary public), who handle these transactions, are personally responsible for any taxes they failed to collect on the sale. It is difficult to find a notario who will not collect taxes from a foreigner when a house is sold.

Is that all? No it gets better (or worse, depending upon your point of view). If you pay a salesman a commission to sell your home, you also owe a 16% IVA (sales tax) on the commission you paid. In Mexico, sales taxes are collected on goods and services.

PLAYAS DE ROSARITO – Around 30% of the more than 100,000 inhabitants in Rosarito are in illegal homes which have no possibility of getting public services because of their lack of legal documentation on their properties.

The preceding was a part of the diagnosis carried out by the Municipal Development Planning Committee, said the agency director, Manuel Ochoa Magallón, who says urgent action is needed at the three levels of government to regularize the ownership of the land.

The problem is more pronounced in the southern part of Rosarito, one of the areas with greatest growth in the past years. There sub-dividers have illegally sold properties, without concluding the legal processes for a real estate deed.

In many of the new Rosarito colonias, there are properties which are still ejido land, and where no public investment, neither state nor municipal, can be carried out.

Ochoa Magallón was sworn in as director of Copladem this Wednesday morning during a meeting, where he announced the start of public meetings to develop the Municipal Development Plan, which will start this Friday in Primo Tapia, and Thursdays, December 22 in downtown.

Ejido El Porvenir, December 12, 2016 – There is a war in the Guadalupe Valley. It is a water war. Hidden behind the glamorous boom of the Mexican Napa Valley, large vineyards and ejidos are fighting, each time with more rancor, access to the vital liquid.

The table is not even. No more than 18 wine producers use more than 50% of the water resources in the region. Meanwhile the communities even lack drinking water. Thirsting for justice, desperate, the farm workers who have worked these lands for three generations, and some 1,000 Kumeyaay, who inhabited this territory for at least 4,000 years, threaten to take other measures.

Here in El Porvenir, says Marco Antonio Orozco, adviser to the Ejido Union of Northern Ensenada, there is not even one drop of water in the homes. The residents have been battling for months with this problem. This is in spite of the national water laws give a priority to those who have rights to the liquid, and those first in line are human settlements. The community which has no water has the first rights.

TIJUANA, Baja California – Crime is one of the main problems impacting pedestrians at the Tijuana and San Ysidro crossing, reports a study carried out by students at the Baja California Autonomous University.

“When first returning to Tijuana a sense of security is felt, as the building is guarded by Army personnel, however, when a person faces what they describe as the place where the street vendors gather, along with deported persons,” said the project coordinator, Amparo López Vizcarra.

He stressed that the lack of security adds to the lack of an adequate infrastructure, public lighting, and the unorganized mob of street vendors.

“Even though the image in the nearby area in the new San Ysidro entrance called PedWest has improved, no attention has been put on safety and public lighting,” he said.

To obtain the results of the survey, they consulted with 655 users at both entrances in San Ysidro and the exits in Tijuana.

The Image and Tourist Certainty Project at the pedestrian crossing is in its preliminary phase, said the person responsible for the project, Adriana Ríos Vázquez.

The first stage was from August through November, with the participation of 20 students, 15 from the School of Tourism and five from the School of Humanities and Social Sciences.